PC manufacturer industry analysis

Things are going extremely well over, I would say, probably now the last year and a half to two years. I think initially where we’ve seen most of the growth and last year there was something like 30-35 per cent growth in the mobile space purely on laptops. Initially what we’ve seen was a big growth in the consumer and small business area, that’s now kinda been joined to the beginnings of this year with an upgrade in the business sector – that means anywhere between 500 employees to multinationals. We’re still seeing that ride relatively high. The complete market if you add consumer and the corporate large business space that growth has beginning to slow off but it’s still pretty much in high double digit growth.

In that space there have been a lot of second and even third time buys, and I think a lot of people who used to buy a big desktop now they’ve moved into the mobile space. There’s a combination of a number of factors, one is certainly the performance of notebooks has caught up with the performance of desktops. Two is definitely the price point, there’s more value in this market than there was, a notebook two years ago that you would have paid 1500 pounds for, you can go and buy an even faster notebook now for probably less than half of that. The other area is there’s a gradual change coming to the UK about how people are conducting their business, a lot of people conducting their business in relation to working from home or being mobile wherever possible. Driven a little bit by wireless, driven by the availability of the connectivity of things like GPRS. A lot of people in the SME space that are buying for their own business, I think the notebook now is ideal for the kind of things they want to do and the connection speeds are actually there to deliver what the desktop would have done from two years previously.

I think also within organisations and certainly we have a lot of discussions with large customers, a lot of the stuff going on now is around work-life balance, how they can offer their employees a certain amount of flexibility. Two years ago we didn’t have broadband connections, now we do, now somebody’s sitting at home at the end of a wire there’s a lot more they can do, the frustrations of the old modem have gone. We’re certainly seeing in discussions with a lot of larger organisations and what they’re trying to define is their user base and how they can add flexibility. And they’re certainly seeing that the opportunities of equipping their people with mobile products be it laptops or pocket PCs is certainly taking off and will increasingly do so over the next few years.

What we’ve seen is not a drastic change, we’ve seen a steady change. For instance our notebook business (in the large business space) used to be about 20 per cent, we’re now seeing that going up to 27 to 28 over a two year period. I think we’ll continue to see that growth but I don’t think you are going to see desktops fall off, I think what you’ll actually see that as a percentage of the overall volume the notebook percentage will increase. But I don’t think we’re going to see 50 per cent magically, I that 27 per cent we’re seeing now will gradually grow to 35-40 percent.

There is out there a continued concern about the cost of supporting notebooks, which do have a higher cost than desktops. I think there are concerns about security, and while they’re looking at opportunities to drive more flexibility amongst their workforce I think what they’re also thinking about is how to secure their networks with people outside the organisation dialing in. There’s also an issue around security being the cost notebooks going missing. I think there’s a gradual TCO process, bear in mind that if you look at large organisations the replacement cycles are typically over a two-year period, so when you’re talking to these guys it takes about two years for them to rationalise where they’re going. They do a lot of investigation and user defining and then they move into the next stage of the roll out.

One of the issues is that a desktop sits nice and handily on a desk and very rarely gets moved, notebook are out there getting battered around, thrown in the back of cars, bounced around on trains and all sorts of situations that desktops just don’t have to go through. So there’s definitely a physical aspect of notebooks just getting beaten around and we’re continually addressing that by improving the reliability of these things which has increased substantially. It also increases with volume, because if you can imagine, as hard drive vendors have increased their volume of notebook hard drives, that has a knock on effect of increasing the reliability – the more you make the more reliable they become.

While companies are looking for increased productivity and the remote user environment there is investments on their side with regards to putting in things like VPN, wireless networks etc… So there’s an upfront investment there to deliver that to the workforce.

Hard drives most common cause of failure.

Size, weight, robustness – minimum of three years. Increasingly looking for communication.

Security is an area which is going through a kind of epiphany within organisations, and there’s a lot more security getting wrapped into notebooks. For instance we’ve incorporated a smart card reader into all of our business notebooks for some time, but I wouldn’t say the actual uptake of smart cards has been astronomical. Also from a wireless perspective, notebooks have been wireless now for 4 years, a lot of companies have been taking wireless but I’m not necessarily certain of how many are switching it on. They like to have the capability of rolling that out.

It seems to be quite ironic that the smaller the device the longer they want the battery life to be.

The overall favourite is still the all in one desktop replacement, what we call the mainstream notebook. That’s probably about double of where the ultra portable is. But if you look at certain highly mobile environments, such as the insurance sector or the legal environment, there are particular sectors where they will not entertain anything but the most ultra portable notebook they can have. The ultra mobile, we’ve seen growing as a percentage of the overall total notebook volume. I think a lot of that is to do with the fact that the performance has increased, it used to be quite a compromise to go ultra portable but it’s no so much of compromise now.

System bus reaching as far as it can go, replaced by PCI express in near future.

There’s no new battery technology out there in the short to mid-term that’s going to change where we are now, there’s a lot of talk about things like fuel cells and you’re going to hear the battery manufacturers speak a lot about that, but the reality is to actually deliver that in volume in a safe environment is someway off. A lot of what is going to come up in the future is trying to lower power consumption on memory, LCD panels, on things like added speedstep – we’ve always had speedstep on processors but increasingly we’re going to be looking at graphics and communications speedstepping.

We’re going to see a movement within the LCD manufacturers towards different formats of panels. We’re going to see a lot more standard notebooks, not just the large formats, using wide-format screens. IT kind of makes sense because there’s only so far you can go on the vertical, and people that travel want to be able to open their notebook in space constrained environment.

We’re also going to see things like wireless networks increasingly driven by things like 3G. We’re going to see faster networks on wireless LAN.